Wholesale inflation rises to 7-month high of 2.59% on costlier vegetables

The wholesale price-based inflation rate rose to a seven-month high of 2.59 per cent after prices remained almost flat for the previous three months. 

Like its retail counterpart, inflation in food items drove up the inflation rate that had stood at 0.58 per cent in the previous month, zero per cent in October and 0.33 per cent in September. The inflation had stood bit higher at 3.46 per cent in December, 2018.

Since food items have relatively lower weightage at 15 per cent in the wholesale price index (WPI), compared to 45 per cent in the consumer price index (CPI), the inflation rate in the former still seemed moderate in December compared to over five-year high of 7.35 per cent in the latter. The biggest pain points were vegetables, be it onions or potatoes. 

“The double-digit primary food inflation of 13.2 per cent in December 2019, driven by 70 per cent inflation for vegetables, remains a source of concern,” Aditi Nayar, principal economist at ICRA, said. 

In fact, inflation in processed food among manufactured products also rose to 6.89 per cent in December, from 5.05 per cent in the previous month. This was driven by edible oils and fats, and dairy products.

Source: Commerce & industry ministry

If one leaves out food products and non-food items in primary products such as oilseeds and minerals, prices basically fell or rose at modest pace. While most fuels prices declined, that of petrol rose by 4.43 per cent in December, against a fall of 6.23 per cent in the previous month. 

After removing food items from manufactured products, the resultant inflation, called core inflation, remained in negative zone for the fifth consecutive months. However, the rate of fall in prices declined to 1.5 per cent in December from 1.9 per cent in the previous month. 

The core deflation indicates slowing growth in the manufacturing category.  “Slowdown in the economy has left manufacturing sector with very little pricing power,” Sunil Kumar Sinha, principal economist at India Ratings and Research, said.